Report by Sustainable Market Strategies

Whilst the world shakes in volatility in the face of the tariff war, the Sustainable Market Strategies team try to find ‘green diamonds’. Their strategy favours stocks with limited exposure to the US and the tariff war, defensive themes that will be less affected by a recession, and names that are focused on services in countries outside of the US. Some of the ideas include NextEra, a stable company operating in the renewable space with long-term PPAs, and First Solar, which does not fit the bill of a defensive company but is one of the few solar manufacturers that does not rely on China. The engineering sector is also of interest; whilst sector stocks recently reacted sharply to recession risks, many of these companies have segments that are relatively recession-proof. Suggested names include AtkinsRealis, Stantec and WSP.

Report by Two Rivers Analytics

"FISH" - First In, Still Here. Two Rivers deconstruct their Earnings Quality model to focus solely on one aspect of poor earnings quality: significant inventory slowdowns. This looks at 1) The materiality of inventory levels to the business. 2) The trend in turnover. 3) The magnitude of the slowdown. As the odds of recession rise, companies caught with excess inventory will find themselves forced to offer price concessions, leading to sales and margin declines, and to earnings disappointments. Highlighted names include Alcoa, Amazon, Arista Networks, Beacon Roofing, Beyond Meat, First Solar, LGI Homes and Walmart.